Same-day delivery helps U.K.’s Argos retail chain compete online

As a major multichannel retailer of general merchandise in the United Kingdom, the Argos retail chain competes with nearly every other store and online retailer in the country, the retailer says. One way it’s trying to stand out is through same-day delivery of web orders, which generated a strong response during a holiday season promotion, says Brian McCarthy, director of home delivery.

Working with Shutl, a London-based company that uses local courier services to make deliveries in dozens of urban areas across the country, Argos—which operates more than 730 stores and is No. 6 in the Internet Retailer Top 400 Europe—is offering same-day delivery to nearly half of its customers, mostly those living within 10 miles of one of its stores.

When a shopper living in an area serviced by Shutl checks out online, she can opt for same-day or even same-hour delivery. A courier working for Shutl then picks up the ordered item from one of the retailer’s stores and delivers it to the customer.

Argos, which has been offering the Shutl service since late 2010, has yet to settle on the best way to charge for the service, McCarthy says.

In a promotion offered for a few days before Christmas, Argos offered same-day delivery for free. “We saw some movement” in the number of customers completing orders, McCarthy says, without elaborating.

It was a costly promotion, but an effective way to expand the retailer’s base of loyal customers, he adds. In addition to testing same-day delivery for free, Argos is also testing offers of same-day delivery for a fee of 5 British pounds (US$7.89) when customers meet minimum order thresholds of £50, £75 or £100 (US$78.92, US$118.37, US$157.83).

Argos hopes that the convenience of same-day delivery will drive shoppers back to the site. “The value to the retailer is frequency of customers shopping,” he says.

“It is difficult to ascertain exactly the impacts Shutl has had on customer conversion,” he adds. “The Shutl option is shown to the customer at the very end of their shopping journey and, theoretically, we have already converted the customer. However, from the repeat occurrences and the positive feedback we have received from users, it is both a fast and convenient way of getting goods to the customer, and offers yet another route that give customers added choice and convenience.”

Shutl’s cost to retailers varies based on such factors as the size of the ordered product and the distance between the pickup store and the customer’s address. Retailers are free to set the price that their customers pay. Tom Allason, founder and CEO of Shutl, says Shutl recommends that retailers charge customers less than 5% of the total order value to get the best response. “When the Shutl price to consumers is less than 5% of basket value, about 40% to 45% of shoppers choose Shutl,” he says.

Shutl has opened offices in the United States and is planning to begin offering same-day and same-hour delivery services in the in the first quarter of this year, starting in New York and San Francisco.

The United States Postal Service is also testing a same-day delivery service called Metro Post, starting in San Francisco.